Uche Usim, Abuja
In an effort to solve the epileptic electricity nightmare, the Federal Government (FG) partitioned the eligible customers in the Nigerian Electricity Supply Industry (NESI) into four blocs. The categorisation and declaration permits electricity customers to buy power directly from the generation companies in line with the provisions of Section 27 of the Electric Power Sector Reform Act 2005. This template allows electricity generation companies (GenCos) and Independent Power Producers (IPPs) by-pass the Bulk Trader, Nigerian Bulk Electricity Trading Plc (NBET)) and distribution companies (DisCos) in order to sell electricity directly to “Eligible Customers” as defined by the regulation.
This provision recognises an end-user or group of end-users formally captured by the Nigerian Electricity Regulatory Commission (NERC) and whose consumption is not less than 2MWhr/h connected to a metered 11kV or 33kV delivery point on the distribution network.
It also applies to those whose consumption is in excess of 2MWhr/h on a monthly basis or whose minimum consumption is more than 2MWhr/h over a 28-day period (a month).
Embedded stipulations in the regulation include; seeking to provide standard rules to facilitate competition in electricity supply promote rapid expansion of generation capacity, as well as the opportunity for improvement in the quality of supply while encouraging third party access to transmission and distribution infrastructure as a precursor to full retail competition in the Nigerian electricity market.
Regardless of the aforementioned objectives, tongues are wagging that very little progress has been recorded just as the policy was almost vandalised.
Nonetheless, in 2021, NERC mandated the Market Operator at the Transmission Company of Nigeria (TCN) to suspend authorised direct supply by electricity generation companies to consumers, a development that created confusion in the polity.
The controversy precipitated as many thought that the regulator, NERC, had jettisoned the eligible customer policy.
But NERC, in a swift response, said the regulations provide conditions for the grant of eligibility status by the Commission, which some customers flouted, hence the directive.
“….the Commission further issued the guidelines for filing for competitive transition charges to account for the loss of revenue by DisCos in compliance with section 28 of the Act.”
In this regard, electricity consumers across the country that comply with the provisions of the Eligible Customer Regulations may avail themselves of the bilateral contracting opportunities presented by the intent of the provisions in the EPSRA and the ECR,” the regulator had in a statement clarified.
Although, since privatisation, Nigeria has increased its capacity to produce substantial power, the additional capacity after the privatisation exercise has been constrained or rejected from reaching the end users.
Constraining generation capacity frequently occurs in the NESI. The Independent System Operator forces GenCos to reduce the amount of power fed into the grid to maintain system stability, system Nominal voltage, nominal frequency and to avoid the overall collapse of the National Electrical Grid.
However, GenCos have repeatedly lamented that the compulsion by the System Operator bears enormous financial implications. They said that besides the huge investment to attain the capacity, they also pay for their fuel, otherwise known as natural gas, to run this capacity amidst other operational running costs.
However, with stranded generation capacity in the electricity market and poor market liquidity, harnessing the dividends of eligible customers is a brilliant way to liberate the electricity sector.
Meanwhile, there are 12 power generation companies in the country, solely owned by the private sector.
They are; Egbin, Azura Power, Sapele Power Plc, Geregu, Transcorp Power, North-South power, Mainstream energy, Pacific Energy, Afam Power, Geometric Power and Ibom Power.
Aside from these GenCos, in 2004, the National Integrated Power Project (NIPP) was conceived as a fast-track government-funded initiative to stabilise Nigeria’s electricity supply system while the private-sector-led structure of the Electric Power Sector Reform Act (EPSRA) of 2005 took effect.
Initially, the NIPP was designed around seven medium-sized gas-fired power stations in the gas-producing states and the critical transmission infrastructure needed to evacuate the added power into the national grid.
As a result, the Federal Government(FG) incorporated the Niger Delta Power Holding Company Limited (NDPHC) as a limited liability company to serve as the legal vehicle to hold the NIPP assets using private sector-orientated best business practices.
The NDPHC is fully subscribed to by Federal, state and local governments with a mandate to manage the power projects tagged National Integrated Power Projects (NIPP), an emergency intervention scheme to tackle the power problem in the country.
In all, 10 power stations were constructed in different parts of the country. These are Ihovbor Power Station Benin, Edo State, with a capacity of 4 x 112.5 MW (ISO 126 MW); Calabar Power Station, Cross River State, with a capacity of 5 x 112.5112.5 MW (ISO 126 MW); Egbema Power Station, Imo State with the ability of 3 x 112.5 MW (ISO 126 MW); Gbarain Power Station, Yenagoa, Bayelsa State with the capacity of 2 x 112.5 MW (ISO 126 MW).
Others are Sapele Power Station, Delta State with the capacity of 4 x 112.5 MW (ISO 126 MW); Omoku Power Station, Rivers State with the capacity of 2 x 112.5 MW (ISO 126 MW); Alaoji Power Station, Abia State, combined cycle plant with the capacity of 4 x 112.5 MW (ISO 125 MW) and 2x steam 255 MW; Omotosho II Power Station, Ondo State, with the capacity of 4 x 112.5 (ISO 125 MW); Olorunsogo II Power Station, Ogun State, combined cycle plant with the capacity of 4 x 125 MW and 2 x steam 125 MW; Geregu II Power Station, Kogi State, with the capacity of 434 MW.
The 10 NIPPs have the combined capacity to generate over 3,700MWs while its rate (Tariff) – price per kilowatt is considered much cheaper even among stakeholders in the energy sector.
Also, Each GenCo has its power generating capacity, which the DisCos are expected to offtake and deliver to provide efficient nationwide power.
It is however restricted by the volume of power it can supply to the energy grid, implying it would only get paid the amount of the energy provided.